DOT 2011: Risk Management Forum looks at regulatory issues

A special Risk Management Forum at the 2011 Deep Offshore Technology International Conference & Exhibition began with a look at the uncertainty surrounding the federal regulations, rules and best practices, as well as the political issues and challenges facing industry today.

Offshore staff

NEW ORLEANS – A special Risk Management Forum at the 2011 Deep Offshore Technology International Conference & Exhibition began with a look at the uncertainty surrounding the federal regulations, rules and best practices, as well as the political issues and challenges facing industry today.

Forum moderator Allen Verrett, executive director, Offshore Operators Committee, opened the Forum by listing some of the areas of uncertainty as follows: 
• Emergency drilling rules, which are expected to become final rules in the near future 
• Containment planning 
• Permits and plan approvals 
• SEMS I and II 
• Regulatory oversight functions 
• Processing of development plans 
• New NEPA 
• The new version of the Minerals Management Service which now is three separate bureaus 
• The volumes of new and proposed Congressional laws.

He also said the lessons learned over the last few months show that the industry is “one incident away from changes” in governmental reaction, that there is no domestic energy policy, that a current administration can and will impact the industry, and that there is no cheap energy.

James Noe, senior VP, general counsel, and chief compliance officer of Hercules Offshore, said that Hercules and its shallow water drilling rigs served as a “canary in the mine” for the deepwater operators as regards regulations and the market. He showed that while rig demand in the GoM is up, the volume of permits issued is not keeping pace. He also said that the reorganization of the MMS into parts may mean longer periods awaiting permits.

Poe Leggette, partner-in-charge, Fulbright & Jaworski, said that the bad regulatory environment has three elements in particular to watch. One is that drilling of a relief well is no longer the last line of defense against a blowout and granting of a permit requires definition of the cap and stack options arranged. He also cautioned that a well-by-well “reengineering” of the well design by regulatory agency employees not only extends the permitting time, but means those employees effectively determine the containment design of a well.

10/12/2011

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